The Best Practices for Contract Management

Organizations that have a contract management process in place can save time and money and therefore have an advantage in the marketplace. At the core of a healthy contract management process is a central location where all contract language is easily accessible.

Analyze the Contract

Review the contract to ensure that it contains all pertinent information. A solid contract clearly defines the roles and responsibilities of organizations and individuals. It should detail all time frames and deadlines, identify how deliverables will be measured and clearly lay out payment arrangements.

Understand the Background

Taking time to discuss within the organization the role of the service provider and the relationship that has developed will help define the terms of the contract. If necessary, meet with the service provider to identify any outstanding issues. A solid relationship with the service provider can help shape a contract that is beneficial to both parties.

Establish Monitoring Protocols

Make sure that systems are in place to collect data, monitor timelines, report on performance and arrange bookkeeping. Well-defined procedures save time and money.

Obtain Necessary Documentation

It is vital at the outset of a contract to identify all necessary licenses and documentation, confirm that all information is current and share this information with the service provider.

Inform All Parties

Members of the contract management team and other stakeholders should be apprised initially of their responsibilities in the contract process. Responsibilities throughout the term of the contract should be clearly outlined so that all team members understand their responsibilities.

Manage Issues

When the contract is signed, any unresolved issues should be handled so they do not to cause problems during the contract term. Unresolved issues at the time of contract signing should be written down and the solution and timeframe agreed upon. This is also a good time to identify contract items that will be left for future development. Any item that requires a variation in the initial contract needs to be carefully recorded and managed.

Assess the Transition

A transition phase will be present in some contracts. At the end of this phase, the parties should meet to assess the overall performance of the contract. In some cases, the transition period is when final details of the contract are hammered out; in these instances, a thorough assessment of the transition period is critical. This is also the time to determine contract arrangements such as resources that will be needed.

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Assess the Performance

Performance management should be continual throughout the contract. Ongoing assessment of performance data, continuing what is working and correcting what is not, will help re-create contract terms that benefit all parties.

Manage Variations

All contracts should include provisions for variations, which should be allowed only in defined instances. Contract variations should always be defined in writing by a formal amendment. A standard change management process should be in place for all variations.